Motorola cuts guidance, another 2000 jobs

Citing softer than expected demand in the telecom equipment market, Motorola has lowered guidance for the third quarter and has announced an additional 2000 layoffs. The cuts bring the total work-force reduction for the year at Motorola to 32,000 positions.

The company now predicts sales to be approximately flat with the $7.5 billion in sales it posted in the second quarter, rather than the 5% increase it previously predicted.

With the lowered guidance, Motorola expects to post a loss per share between 5 cents and 8 cents, roughly in line with the 3-cent to 9-cent loss analysts had predicted before the announcement.

Motorola said it is currently seeing improved sales and profitability in its Personal Communications Sector and Commercial, Government and Industrial Systems Sector. But all of the company’s other units are expected to post sequential declines in both sales and profitability for the quarter.

The company also announced that it will cut 2000 positions from its Global Telecom Solutions sector by the end of the year, citing capital-expenditure delays by wireless carriers.

Exactly whom this will affect hasn’t been determined.

“We haven’t defined what occupations are involved…We haven’t defined the locations either,” said a Motorola spokesman.

The news comes just one day after Motorola intermediate-term rating was cut from “accumulate” to “neutral” by Merrill Lynch, which sighted prolonged weakness in the company’s key markets as the cause of the downgrade. Merrill Lynch expects Motorola’s infrastructure sales to decline 8% this year and 7% in 2002.

Despite announcing a breakthrough in semiconductor materials early this week, Motorola’s share price has fallen more 23.9% during the last week, with the stock trading at $13.94 per share at today’s close.